MAS sets cap on those heavily in debt

New move to help borrowers avoid getting overwhelmed by unsecured debt

More help is on the way for borrowers in danger of being overwhelmed by unsecured debt like credit card borrowing.

A new Credit Limit Management Measure coming into effect on Jan 1 will potentially affect people who have unsecured debts that are six times their monthly income.

Banks will not be allowed to grant any increase in credit limits or any new unsecured credit facilities to such a person if they cause his total credit limit to exceed 12 times his monthly income.

Ms Loo Siew Yee, assistant managing director (policy, risk and surveillance) at the Monetary Authority of Singapore, said yesterday that the measure aims to help borrowers avoid getting over their heads in debt.

In June 2015, an industrywide borrowing limit was introduced that capped unsecured loans to 24 times one's monthly income.

It was cut to 18 times in June this year, and will be lowered to 12 times from June 2019.